Ideally you start twelve to twenty-four months before you want to sell. If you have less time, the first four items are still worth doing.
1. Clean up the books
- Three years of tax returns and year-to-date profit and loss statements that agree with each other.
- A one-page schedule of owner pay, owner benefits and personal or one-time expenses (this is how SDE is built).
- Monthly financials, not just a year-end packet. Buyers and lenders want to see trends.
2. Reduce dependence on you
- Write down how the business actually runs: scheduling, pricing, ordering, quality checks.
- Move key customer and vendor relationships to someone on the team.
- Hire or promote a manager if you can. A business that runs for a month without you is worth more than one that does not.
3. Look at customer concentration
If any one customer is more than about 15 to 20 percent of revenue, buyers will discount for the risk. Written contracts and recurring revenue help.
4. Check the lease
How many years remain, what the renewal options are, and whether assignment needs landlord consent. A short lease can sink a deal.
5. Licenses, permits and insurance
List every license and permit, who holds it, and whether it transfers to a buyer. Make sure insurance and claims history are current and documented.
6. Tidy the basics buyers see
Equipment in working order, a simple equipment list, a clean location, a current website and Google listing, and employee records in order.
7. Build your advisory team
A business attorney and a CPA who have handled a sale before. Talk to them before you talk to buyers.
8. Decide who gets told, and when
Most owners tell nobody until a buyer has signed a confidentiality agreement and shown proof of funds. Key employees are usually told later, with a retention plan.
9. Settle your personal plan
What you will do next, what number you need, and how much time you are willing to stay for the transition. The clearest sellers get the best deals.